America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Steve Robinett who wrote (7859)	2/13/1998 8:12:00 PM
From: PAL	Read Replies (1) of 13594

Steve: AOL stock keeps going through the roof as a result of those 22 out of 24 analysts keep giving a buy or strong buy ratings while only 2 give a hold. Why is this happening when the fundamentals of the company are really poor? Brokerage houses make lots and lots of money in underwriting IPO or secondary offerings. Guess when did the latest stock start? That was when AOL announced to increase the number of authorized shares from 300 M to 600 M. The stock rose sharply again when it was announced 2 for 1 split instead of 3 for 1 or 5 for 2. That latest announcement will leave AOL with about 400 M of authorized shared unissued. There is no doubt that AOL constantly needs money, just look at the balance sheet. Negative working capital. With 400 M shares available for issuance, brokerage houses are salivating to get the business. Do they want to be on the bad side of AOL? The higher the stock price, the more commissions they can reap. Stockholders are happy, brokerage houses are happy, Steve Case is happy, so why rock the boat. But will it continue? Will the market always take what is fed by analysts?

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